Bank of Korea (BOK) has invited firms to become the technology provider for a central bank digital currency (CBDC) based on distributed ledger technology (DLT) and shared quite a few details.
The announcement says the DLT-based simulation project runs for ten months. The main first phase will run from August to December 2021. Korea’s simulated CBDC will have a two-tier structure with the central bank issuing the currency and financial institutions performing the distribution.
The first phase involves the creation, issuance, and redemption of the digital currency. Issuance will happen within the central bank’s computing environment, which is physically disconnected from the network. It will then be issued to an institution’s electronic wallet in exchange for deducting money from the institution’s central bank account, according to Ledger Insights.
This phase aims to trial use cases such as end-user wallets, secret key storage to make smaller payments, exchanging bank deposits for the CBDC, or using the digital currency for payments.
A second phase will involve cross border remittance, offline payments, regulatory compliance, and integration with systems for buying digital assets.
The total budget for the project amounts to USD 44 million. To learn more about CBDCs, download our ebook Central Bank Digital Currencies for Beginners – A Quick Guide into CBDCs.
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